Cisco Innovation Patrick Wetterwald Cisco Technology Center France © 2003 Cisco Systems, Inc. All rights reserved. 1 Overview of Disruptive Innovation © 2003 Cisco Systems, Inc. All rights reserved. 2 Disruptive Innovation Business Models and New Markets, not Technology • Sustaining innovation – anything that makes current products and services better, faster or cheaper • Disruptive innovation – creates new markets or offers more convenience or lower prices at the low end of an existing market © 2003 Cisco Systems, Inc. All rights reserved. 3 Disruptive Innovation and “Overshoot” Performance A Key Driver of Market Transitions Incumbents nearly always win Disruptive Innovations Entrants nearly always win Time Source: Innosight © 2003 Cisco Systems, Inc. All rights reserved. 4 Performance Different Performance Measure Two forms of Disruptive Innovation Wal-Mart, Costco Time PC, Wireless Telephony Time Company improvement trajectory Customer demand trajectory Source: Clayton Christensen © 2003 Cisco Systems, Inc. All rights reserved. 5 Why Disruption is So Powerful • Predictive and Pragmatic Can determine if (and when) a market is ripe for disruption • Enables firms to tap new growth markets Low-end of existing markets (over-served customers) Brand new markets (non-consumers) • Disruption is about business model innovation Much harder for incumbents to change their business models than adopt to new technology • Creates “double bottom line” impact As disruptions improve, growth AND margins expand © 2003 Cisco Systems, Inc. All rights reserved. 6 Cisco – History of Disruption “Leading Supplier of Enterprise Internetworking” • Late 1980s – Multi-Protocol Router enables LAN internetworking to become Enterprise Internetworking New market disruption that empowers departmental users of IT and eventually displaces interoffice mail and “sneaker net” • 1991 – Cisco Blue – low-end disruption of SNA SNA over IP replaces dedicated SNA private line networks • 1993-95 – Cisco acquires LAN switching Cisco Fusion was Cisco’s strategy for hybridizing routing and switching, capturing the growth potential of a low end disruption © 2003 Cisco Systems, Inc. All rights reserved. 7 Cisco – History of Disruption (cont.) “Worldwide leader in networking for the Internet” • Late 1990s – Ethernet+IP vs. ATM internetworking Low cost, “good enough” Ethernet + IP disrupts ATM in the battle for Enterprise D/V/V convergence • 2003 – Cisco acquires Linksys Captures growth of new market disruption (home networking) • 2006 – Cisco TelePresence Integrated system that delivers “in person” experiences, simply © 2003 Cisco Systems, Inc. All rights reserved. 8 Technology Center © 2003 Cisco Systems, Inc. All rights reserved. 9 Organization: who we are Office of the President Chief Development Officer Horizontal Business Functions Finance - HR Manufacturing Sales - Marketing Technology Center Technology Groups Access Aggregation Ethernet Access Internet Routing Internet Switching & Services IOS Technologies Network Edge Aggregation & Routing Network Management Optical Storage Voice Wireless © 2003 Cisco Systems, Inc. All rights reserved. Corporate Business Development Staff of : Engineers BizDev Mgr Program Mgr Tech Center EMEA 10 Innovation @ Cisco : organizational view © 2003 Cisco Systems, Inc. All rights reserved. 11 Technology Center : Mission Initiate Nascent Tech/business trends Incubate Accelerate Disruptive Adjacent markets Adoption Product enhancement • Idea generation • Idea Traction • Idea portfolio • Patents © 2003 Cisco Systems, Inc. All rights reserved. • Ideas becoming Products • New businesses 12 Technology Center : Background Standards Partners Products …1997 1998 1999 Partners Engineering © 2003 Cisco Systems, Inc. All rights reserved. 2000 Global Alliances 2001… …2006 Technology Center 13 Growth/Innovation bets Healthcare 2.0 Emergent Collaboration © 2003 Cisco Systems, Inc. All rights reserved. Connected Life Innovation Pipeline 14 Emergent Collaboration http://www.secondlife.com © 2003 Cisco Systems, Inc. All rights reserved. 15 Emergent Collaboration - Enterprise focus An Enterprise focused immersive environment, using network intelligence to simplify all forms of communications and enhance collaboration. © 2003 Cisco Systems, Inc. All rights reserved. 16 Healthcare : partnership platform Systems Devices ACCESS, Network PACS Med 2.0 People Telehealth MDC Internet Nurse@Home © 2003 Cisco Systems, Inc. All rights reserved. 17 Wireless: MuniMesh Point-toPoint Bridging Point-toMultipoint Bridging Wireless Mesh Networking © 2003 Cisco Systems, Inc. All rights reserved. Outdoor Wi-Fi Extension 18 Sensor Network today • Current situation: Sensor / sensor gateway Connected to PC/patch panel over serial/RS 232 PC is collocated with GW © 2003 Cisco Systems, Inc. All rights reserved. 19 Sensor Network tomorrow Management sensor Controller sensor Controller Gateway sensor Gateway Gateway Mesh Network Internet Router Sensor Application sensor Gateway Controller Sensor sensor Corp Network sensor Network sensing Sensor Mission Application Networking © 2003 Cisco Systems, Inc. All rights reserved. 20 © 2003 Cisco Systems, Inc. All rights reserved. 21 © 2003 Cisco Systems, Inc. All rights reserved. 22